A corporation reports the following year-end balance sheet data.The company's equity ratio equals: $$\begin{array} { l r l r r }
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 5,000 \
\text { Accourts receivable } & 55,000 & \text { Long-temn liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Cormon stock } & 100,000 \
\text { Equiprment } & \underline{145,000} & \text { Retaired earnirgs } & \underline{90,000} \
\text { Total assets } & \underline{\$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Question

A corporation reports the following year-end balance sheet data.The company's equity ratio equals: $$\begin{array} { l r l r r } 
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 5,000 \
\text { Accourts receivable } & 55,000 & \text { Long-temn liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Cormon stock } & 100,000 \
\text { Equiprment } & \underline{145,000} & \text { Retaired earnirgs } & \underline{90,000} \
\text { Total assets } & \underline{\$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Quizplus · Accepted Answer

The equity ratio is calculated as Total Equity divided by Total Assets. Total Equity is the sum of Common Stock and Retained Earnings, which is $100,000 + $90,000 = $190,000. Total Assets are $300,000. So, the equity ratio is $190,000 / $300,000 = 0.63.

A Corporation Reports the Following Year-End Balance Sheet Data A)058 B)1

A Corporation Reports the Following Year-End Balance Sheet Data A)058
B)1